I hereby acknowledge the receipt of $465,000 of advances to the Cook County National Bank of Chicago for my account, same being made by Allen, Stephens & Co. in money, paper, and endorsements. I have arranged with them for additional advances. In consideration thereof I hereby grant and convey to Allen, Stephens & Co. by way of mortgage and as security for such advances, all my real estate of every kind and description, and wherever situated.
This mortgage was not filed for record with the recorder of deeds of Polk county until the 19th of January, 1875. On the 30th of November, 1874, it had been placed in a sealed package and intrusted to Mr. Denman in the city of New York with sealed instructions and directions for him to proceed with the package to Chicago and there await further instructions. He was not even informed of the contents of the package and was instructed not to open it until he received advices from New York as to further proceedings.
When the people of Des Moines began to realize that B. F. Allen had really become a bankrupt they were ready to believe almost any theory that would exonerate him from the censure that he deserved in risking the money of his depositors in wild and foolish speculation. One theory promulgated and believed was that he had been deceived in the value of the assets of the Cook County Bank when he purchased the same. On the contrary the evidence taken in the suit to which I have alluded shows that he did not pay a dollar of his own money for the stock of the Cook County Bank. Several years before his failure and before his purchase of the Cook County Bank, or a controlling interest in it, he had been appointed by the United States Circuit Court of Des Moines receiver in a litigation that had been commenced against the Chicago, Rock Island & Pacific Railroad Company. As such receiver he had come into possession of about $800,000 of bonds issued by the Rock Island Company. These bonds he had hypothecated in New York City for money with which he carried on his speculations, and as the time approached for him to make settlement of his receivership he found it necessary to do something in order to save the sureties on his bond. He accordingly went to Chicago and in May, 1873, he purchased the controlling interest in the Cook County Bank, giving a draft for the larger part of it on Allen, Stephens & Co., and his note for the balance, all of which was ultimately paid out of the money of the depositors of the Cook County Bank. The funds that he came in control of by this means enabled him to settle his receivership. Mr. Allen, in his testimony in the case referred to gives the following account of his losses by speculation: